You might think that credit scores only affect your ability to purchase products and services on credit. According to USA Today, more than half of consumers believe that they have control over their finances, but around 54% of consumers have never checked their credit score. It might not be a priority for some people with a stable income. However, not checking may make or break your chances of landing that dream job, especially ones in competitive industries. Here’s how a bad credit score can impact your chances of getting a job in tech.
1. Competitive Nature of the Tech Industry
Business Wire highlights that the past two years have provided a strong starting point for many global tech startups, which have ushered in more accelerated and inclusive hiring processes. But the recent economic volatility has been steering top talent back to larger companies, and successful startups are likely to hire employees as they continue growing. This means new candidates in the industry must be capable of proving their eligibility not just through skillsets, but also through their financial health.
2. Employers and Credit Checks
You might be asking why and how employers check the financial health of talent. Upgraded Points explains that they do so to check credit, loans, your payment history, and any amounts that went to collections. Around 16% of companies do financial checks on their job candidates, and around 33% do credit checks. A person's credit score can reveal a lot about their character and how responsible they are in terms of managing their finances. It’s also a sort of safety check for employers because they see you as a potential investment.
3. What Makes a Bad Credit Score
Credit score ranges differ based on the credit scoring model used, which can be FICO or VantageScore, as well as the three major credit bureaus that pull the score: Experian, Equifax, and TransUnion. 90% of lenders pull from your FICO score. The ‘very poor’ score ranges from 300 to 579, while the ‘excellent’ score ranges from 800 to 850. Your score is affected by whether or not you pay credit accounts on time, your credit utilization rate, the length of time you’ve had credit, how often you apply for credit, and other factors. If you have a very poor credit score with debts piling up, a Scottsdale bankruptcy attorney, or similar in your area, can work with you to extinguish credit card debt and help you regain control of your finances.
4. No Credit is No Different Than Bad Credit
Many people make the mistake of dodging credit altogether, thinking that it’s the best financial decision. In fact, NextAdvisor reports that around 45 million adults are ‘credit invisible’, many of which come from underprivileged communities. This can also be attributed to lower financial literacy rates. But without credit, you’ll struggle with borrowing money, applying for housing, starting a business, high insurance costs, and even landing a job in a lucrative environment such as tech.
5. Building Your Credit Score for Job Apps in Tech
Although not all tech employers are known to perform credit checks, it’s better to be prepared. As Allison Dietz writes in 3 Things That Make Recruiters Reject Your Application, “the ready candidate is the hired candidate”. If you’re hesitant to build credit due to fear of debt, there are a few simple ways to build credit for the first time. You can use a secured credit card, which requires a deposit that will serve as a collateral for the card company. You can also take out a credit-builder loan, which is solely for building credit.
5 Repercussions of Bad Credit Score to Tech Applicants
In summary, having a bad credit score can affect your chances of landing a tech job in five aspects: Competitiveness in tech Passing credit checks Overall credit score No credit score Preparedness for job apps Recruiters will prioritize applicants that are confident and trustworthy, so start building your credit score before sending in your application. For more helpful advice, check out the rest of our blog here at Break Into Tech.